The Services Shift by Robert E Kennedy (with Ajay Sharma) reached me a little while ago and now I've read it I can recommend it as an excellent and concise overview of the offshoring of services. It combines very well the economics of global supply chains with a business perspective, which is quite a hard trick to pull off –  I think it will be useful to both audiences.

Quite a lot of the book is retrospective but there is also a foward-looking section on business strategies and policy, with the firm conclusion that outsourcing in services will continue to grow, as it has in manufacturing. On balance I think this is right. Although world trade has plunged during the winter, pointing to a 30s-style retreat from globalization, I find it hard to see how 25 years worth of the building of supply chains across borders could easily be unpicked and restitched on a national basis. It doesn't seem plausible that the US or UK will rebuild from the ground up the kind of basic manufacturing that has been outsourced.

When it comes to services, however, it does seem likely there will be a long pause in the outsourcing/offshoring process, especially as much of it had occurred in financial services. Call centres are exactly the kinds of jobs that will surely stay onshore until after the recession? Beyond that, the economic and business logic set out in the book will kick back in. But I'd be interested to get Bob's update on how he sees the situation if he's reading this.

Is it worth reading more on the pscyhology of well-being? In preparation for my next book, I've been reading around in the psychological literature on happiness. This week I polished off Mihaly Csikszentmilhalyi's Flow and Ed Diener and Robert Biswas-Diener's Happiness. They were both modestly illuminating, not least because of their insistence that more money does buy happiness, albeit with diminishing marginal happiness returns. But not much more than that.

The Diener/Biswas-Diener book put me off to start out with by its repeated description of the latter co-author as 'The Indiana Jones of positive psychology', but the occasional sidelight on his research methods which include having been branded in a Masai initiation ceremony and eating microwaved cockroaches eventually persuaded me the title might well be justified.

However, my main gripe about both books is the apparent methodology of psychology. The typical pattern is that a generalisation is made, followed by 'For example,…' and the description of a single experiment. The conclusion drawn in most cases seemed to me much more than the specifics of the experiment could support. I appreciate that eventually enough experimental results pointing in the same direction can provide strong support to more general conclusions, but in neither book do the references include the kind of meta-survey articles of experimental results that one comes across in the medical literature. And there is very little of the statistical analysis of cross-section or time-series data sets that I'm familiar with as an econometrician.

Of course these are both pretty popular books, so it might well be that the evidence is simply submerged in the interests of attracting readers – although if so I would still have liked some references to wherever it can be found. Am I being too grumpy? Are there better overviews of the positive psychology relevant to an economist's take on well-being. If so please tell me, as I've read plenty of these books by now and at the moment think they've added not much to the excellent survey articles by Daniel Kahneman and his co-authors.

The spotlight on bankers' bonuses in the past couple of weeks has reminded me to say how much I enjoyed Paul Krugman's latest, The Conscience of a Liberal. I hadn't bothered to read it in hardback last year, partly because I assumed it would be a collection of his newspaper columns and partly because he seemed to have been writing about the same thing all the time whenever I looked. However, the paperback caught my eye in the bookstore and it handily filled a few train journeys.

He argues against the received wisdom that greater income inequality is due mainly to technological change amplified by globalisation, and that the underlying inequality has in turn led to greater political partisanship in the United States. Non-Americans probably didn't ever accept this conventional wisdom in its bald form but nevertheless did see technology and globalisation as key forces against which governments could resist only to a limited extent. My limited work on inequality (with Francois Bourguignon and other CEPR economists), a few years ago, persuaded me that inequality outcomes within countries were so different they must depend very much on political institutions and attitudes, so there was nothing inevitable about more technology/greater globalisation leading to greater inequality. But this wasn't a mainstream view.

Anyway, Krugman presents a very strong and well-evidenced argument that the causality runs from the politics to the economics: that a shift in the power base of the Republican Party and an ideology-driven political agenda led to greater inequality in the United States. I'm sure Republicans will disagree with him, but he sets out a case that requires answering.

The book also makes a powerful plea for healthcare reform in the United States. No other civilised nation can understand how the US can tolerate its unbelievably expensive and unfair healthcare system. As Krugman points out, the US spends twice as much per capita as other leadng economies, and gets lower life expectancy (p218). “We're off the charts in terms of what we pay for care, but only in te middle of the pack in terms of what we actually get for our money.” Presumably the jump in unemployment this year, with its consequences for loss of coverage for so many people, will help keep up the political impetus for reform.

Like many foreign admirers, I'd agree with Krugman that one of the most attractive aspects of the US in our lifetimes was the fact that it was a middle class society, and that a modest version of the American dream could so often become a reality. This used to be a genuine contrast with elitist societies such as Britain and France (despite our European welfare states). The Gilded Age of recent times is irrecoverably tarnished, so the intellectual climate which made extreme inequality tolerable has come to and end. But there's obviously still quite a task for President Obama in recreating that very American sense of fairness and opportunity, not to mention achieving healthcare reform.

Tim's terrific book The Logic of Life is just out in paperback. It was reading the hardback, as a follow-up to The Undercover Economist, that helped persuade my eldest son to apply to study economics at university, having earlier resisted following in his mother's footsteps. So I think that's a pretty strong recommendation. (Said son still hasn't read any of my books.)

In my recent conversation with John Kay, we spent some time discussing the merits of self-publishing. The Long and the Short of It
is not the first of his books he has published himself, but it is the
first which is not simply a collection of previous columns. At this
early stage – the book has been out nearly 2 months – he is very
positive about this route. He argues that the main service publishers
can provide is distribution, still critical in the US market and for
certain types of book – textbooks for instance. His book is written
mainly for UK readers, and with a well-known FT column and loyal fan
base, he can do his own marketing and distribute adequately online and
via the biggest high street bookseller. The other bits of the
publishing package are now reasonably easy and relatively cheap to put
together, John says: financing, printing, editing, design and
copy-editing, and sales/PR/marketing. The reader-facing parts of this package, the design and editing, are of high quality – higher than is the case with many 'published' books (the cover design is pictured below). John opted to publish immediately
as a trade paperback, not the tradition in the UK market but now
happening more and more often.

He published the previous essay collections under a creative commons license.
This one has a standard copyright notice but John is clearly basically
relaxed about the copyright issue. As he wisely puts it: “Creative
people need others to use their material.” It's clear he's not profit
maximizing on this title either. The price is £11.99 – £7.89 on Amazon when I
looked – and without the usual price discrimination tactic of a
hardback edition for impatient readers. However, out of a first print
run of 10,000, John told me about 1,500 were left in stock, the bulk
therefore either sold or on the book shop shelves. So it looks like he
is on to something in terms of his real maximand, readership.

I've now started my copy and recommend it to modest investors based in
the UK. It's full of sound common sense, and goodness knows we need
every piece of good advice we can get in present conditions.